OIG Blog Entries from July 2013

The U.S. Postal Service uses a variety of strategies and media – including direct mail, television, radio, and sponsorships – to advertise, market, and promote its products and services. These efforts also help to build brand awareness for the Postal Service. Some campaigns have succeeded, such as the Priority Mail Flat Rate box campaign, “If it fits, it ships®.” Other efforts have been less successful.

Over the years, the Postal Service has faced an advertising conundrum. Some have complained that a government monopoly shouldn’t be spending money to advertise. Others have grumbled that the Postal Service isn’t doing enough to promote its products and services, particularly compared to its competitors. Certainly, the Postal Service’s current financial condition restricts its advertising budget. Then, there have been concerns about how well the Postal Service has managed and monitored advertising contracts, which one of our audit reports documented earlier this year. The Postal Service took corrective actions and has new contracts in place.

Undoubtedly, we live in an age of competitive advertising. Every product the Postal Service has faces competition, even the monopoly products. The Postal Service needs to use advertising to promote its products, services, and the brand itself. The question might be: What is the most effective way for the Postal Service to advertise? Should campaigns focus on traditional media, or focus on new media, like Facebook, Twitter, and YouTube?

The Postal Service’s upcoming launch of an ad campaign might provide insights on the best possible strategy. It plans to kick off a nationwide multi-channel advertising campaign in August to promote its Priority Mail changes, which include a “simplification” of Priority Mail services and a name change for Express Mail. For some customers, the new longer name of Priority Mail Express, and the revised Priority Mail service offerings of 1-, 2- or 3-days might actually seem more complicated than simplified. A successful advertising campaign would reduce that confusion.

Share your thoughts on the Postal Service’s advertising strategy and its recent campaigns. How effective have they been? What changes would you like to see?

Matching workforce to workload has been a long-term struggle for the U.S. Postal Service. In its banner years, when volume was increasing, the Postal Service often found it difficult to quickly reduce workhours to offset seasonal dips in mail volume. Over the past 6 years, as volumes have steadily declined, the Postal Service has done a better job of matching its work hours to its workload. It has its lowest number of career employees in 25 years and productivity has seen steady cumulative improvement.

Yet finding that perfect match remains elusive. In recent years, the difficulties are evident in an increased use of overtime hours. In a recent audit report, our auditors found three districts with their highest overtime rates during the past five years, and one district where employees received the highest overtime dollars. In this latter district, the Postal Service paid seven mail handlers between $65,000 and $76,000 each for overtime workhours in FY 2012, resulting in their salaries more than doubling. Overall, overtime hours accounted for more than 7 percent of total workhours in both fiscal years (FY) 2011 and 2012. The rate is well above the Postal Service’s target rate of 5 percent. The Postal Service’s paid overtime costs have been steadily increasing the past 4 years. They totaled $3.5 billion in FY 2012 compared to $2.5 billion in FY 2009.

The Postal Service uses overtime hours to provide flexibility and meet operational requirements without having to increase overall staffing levels. This has been a useful tool over the past few years, as the Postal Service has consolidated and closed facilities, and seen the departure of thousands of employees. Overtime usage has allowed the Postal Service to quickly adjust its workforce as it transitions to a leaner network and makes the necessary organizational changes.

Still, the OIG found opportunities for tighter controls on overtime usage. The OIG review of the four districts determined that the Postal Service could reduce overtime usage by establishing a plan to address staffing vacancies, better aligning workforce to workload, and implementing plans that align mail arrival times with carrier schedules so carriers aren’t waiting on mail to arrive at delivery units, then spending overtime hours delivering the mail.

Please share your thoughts on the Postal Service’s use of overtime. Is it the best tool for managing workhours during consolidations, closures, and realignments? If not, are there better tools and approaches? What steps do you think the Postal Service could take to minimize use of overtime pay?

A rose by any other name would smell as sweet, but what about Parcel Post and Express Mail? If these products have new names, will they be more appealing to customers? We are about to find out.

Later this month, the U.S. Postal Service will change the name of Express Mail to Priority Mail Express. Earlier this year, the Postal Service renamed Parcel Post to Standard Post. These name changes also come with some product enhancements, including improved tracking and insurance services. All of these changes are designed to strengthen the Postal Service’s shipping business in the rapidly expanding package delivery arena.

Parcel Post, one of the Postal Service’s oldest products and among its best-known brands, just celebrated its 100th anniversary. Its origin in 1913 is memorialized in stone at the old Post Office Department headquarters in Washington, D.C, where it is among a list of historic postal products inscribed in the building’s façade. In 1977, Express Mail became one of the few new “subclasses” created since passage of the 1970 Postal Reorganization Act. Since then, it has been known as the Postal Service’s premier express mail service, providing overnight delivery to some destinations. Of course, postal products should evolve to meet market needs, not remain frozen in time like an etching in stone.

Despite the long history of these products, the Postal Service believes that these rebranding changes will reinvigorate them and make them more competitive. In particular, the Express Mail change seeks to capitalize on the strong Priority Mail brand and the positive associations with it. Express Mail volume has fallen three times faster than Priority Mail since 2006, and Priority Mail is 20 times larger than Express Mail; and unlike Express Mail, Priority Mail has seen recent volume growth. Also, the Postal Service said “Priority Mail Express” will allow it to offer more definitive service expectations. Priority Mail will no longer be called a “2-3 day” service, and instead customers will get 1-day, 2-day, or 3-day service based on the specific origin-destination characteristics of the package.

Do you think the name change will reinvigorate Express Mail? Will customers be confused by the name changes? Are the name changes important from a sales and marketing perspective, or are there other service-related changes that would help?

Regarding Standard Post, does the jettisoning of the established “Parcel Post” brand strengthen the Postal Service’s position in the shipping business? Does the inclusion of “Standard” in the title make it too similar to other postal products, notably the mail category of Standard Mail, which is used by business mailers to send advertising? Or is the name likely to be unimportant to users of this ground parcel service?

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Recent Blog Comments

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